Canada has rescinded a tax aimed at some of the US’ largest technology companies, two days after being threatened with more tariffs by its southern neighbour.

Canada’s digital services tax (DST) was to go into effect on Monday but was pulled by the minister of finance and national revenue, François-Philippe Champagne, on 29 June in a bid to keep trade negotiations with the US on track. The DST would have collected revenue from online marketplaces, online advertising and social media companies, including giants Meta and Google, whose income within Canada are currently hard to track.

The Canadian government was expecting a windfall of C$7.2bn ($5.3bn) over a five-year period, which would have begun retroactively in 2022.

US president Donald Trump on 27 June again threatened punitive tariffs against Canada this week if the DST was not lifted. Trump and Canadian prime minister Mark Carney agreed on 16 June at the G7 Leaders’ Summit that they would work toward a broad trade agreement within 30 days. Canada, in a statement, said it is now targeting 21 July to finalize a deal.

The two countries are still part of the Canada-US-Mexico Agreement (CUSMA) free trade agreement negotiated by Trump in 2020. But Trump has imposed tariffs of 25pc on imports of cars and auto parts from Canada, and 50pc on steel and aluminum.

An executive order signed by Trump in March exempts all CUSMA-compliant goods from his new tariffs.
Publication date : 30/06/25
Reference
Canada rescinds digital tax after Trump threats